Continuing with our newsletters from last year, our initial agenda for the first newsletter of 2008 was to discuss the Online Marketing budget for the coming year. However, in response to the present economic slowdown as experienced in the US economy, we decided to broad base the purview of this newsletter. We believe it is relevant to include the after effects of this recessionary trend, and also discuss the immunity that the web based businesses have to this phenomenon.

We would also deliberate on the course of action that may be taken to brave these times and keep afloat.

In the last 100 years there have been 20 recessions - ten since World War II. Studies have established that when the economy enters a recession, 75% of companies respond by cutting back, and trying to “tough it out".

While it is still being debated if the present trend can be termed as recession or not, the jitters are already noticed. In such a trend, it is natural for businesses to panic and cut down on the marketing budgets. This cost cutting has a multiplier effect, since it further pushes down the sentiment.

Axing the marketing budget is not uncommon but this is where we differ. We strongly recommend that you should increase your advertising initiatives during a recession, since Internet-based advertising provides the best return of your marketing budget. The rational to increase the advertising budget is that the competitors will spend less and, so, the company that continues to advertise will come out of the economic downturn with better name, recognition, and a better customer base.

It should be remembered that during a recession consumers don’t stop buying. While they become more selective, they are still going to buy from someone. They are more likely to buy from businesses that they know and like. A more pronounced marketing initiative would be instrumental in delivering that.

Another argument in favor of increased marketing spend is that the more visible you are, the more confidant your customers and prospects become. The more they are reminded of your legitimacy and staying power, higher their inclination to believe you'll be there for them tomorrow.

Surviving a recession isn't just about cutting costs - it's about spending wisely. Online marketing scores here since it offers highest ROI and helps reach out to the target audience more effectively.

Consequently, Online marketing is expected to increase during a recession since it is more cost-effective than more conventional forms of advertising and marketing.

With Internet advertising becoming a cheaper and easy option for companies, it becomes a preferred option during tough economic times. Hence companies will be focusing the majority of their ad campaign on the Internet, which correlates to the drop in ad revenue for the likes of newspaper and television companies.

This shift in the preference of the marketing medium is substantiated with statistics. A survey of 213 b-to-b marketers was conducted online during the last week of November and the first week of December 2007. It was found that 60.1% of marketers contacted planned to increase their overall marketing budgets in the year 2008 while 29.6% plan to keep budgets flat and 10.3% plan budget decreases.

Of the respondents, 62.4% reported to have customer acquisition as the primary marketing goal for 2008, while 19.3% quoted brand awareness was their main goal. Customer retention as the online marketing objective came third at 11.7% followed by other objectives (6.6%).

This is further corroborated by the response of 79.1% marketers who plan to boost their online budgets in this year. This figure is up from last year's survey, in which 75.6% of marketers said they planned to increase their online budgets in 2007.

The statistics have clearly indicated that it is new customers that all the businesses are vying for. A series of Online Marketing initiatives can be expected to achieve this objective, and a significant increase in the Online Marketing budget is anticipated. This is expected across the board thereby increasing the competition amongst the marketers to catch the customers fancy.

Among the online areas that are likely to see increase in this year, search engine marketing will take the lion’ share, with 64.3% of the total online marketing budget being committed to it.

This may come as a warning bell for the existing web businesses. However there should not be cause for panic since the existing businesses would enjoy the first mover advantage. A more comprehensive marketing strategy employing all the tools of online marketing should be adequate to leverage the first mover advantage. This would allow the early entrants to stay in touch with their customers, and communicate well with them.

During this gloomy sentiment, it is natural to despair and prepare for the long downward roller coaster ride. However, instead of panic there are some things that can be done to recession-proof your Internet marketing:

• Make every customer happy. It's easier to keep a customer than it is to get a new one. Hence it is imperative that we communicate with them more often by sending frequent mailers, newsletters or sales promo mailers. Businesses should make every effort to address the customer’ queries promptly and comprehensively.


• Review your site to make every single page a perfect sales letter. This may require editing and re-editing. While this is an iterative process, constant improvement will mean better conversion and better search rankings. If you're not sure what to do, you may contact expert agencies to do that for you.


• Explore newer markets. Depending on what you sell you can make sales all over the world because regardless of how the economy is in the U.S. there are people with money all around the world. E.g. If you are a villa rental agency in the Caribbean with a pre dominantly US audience, it may be a good idea to target the affluent class in the South East Asia region.
  This could be done by increasing the scope of the key phrases in the Online Promotion using Search Engines.


• Deliver more information on your web site. Make sure that visitors can learn every detail of your product or service online. This would reduce the phone calls and save you time. Time costs money, so this saves you money in a time when money is a bigger concern.

In the eventuality of the recession fears being real, there will be an upside for those who can hang in there. As with other sectors of the economy, theoretically many players would drop out. For example, some people may not be able to run their site at a profit. Other sites that were not running at a profit, but out of the owner's personal finances, may have to close as the webmaster's financial situation changes. This might lead to cheaper domains and entire websites for sale. It would be a buyer's market. However the flip side is less profit, or no profit, in the short and medium term. To draw an analogy, this is like the stock markets wherein the best time to buy is when the markets are at a low.

It may also be prudent to ally with complementary websites and start an affiliate program to be mutually beneficial.

Very often small businesses make blanket cuts to their marketing budgets to save money, resulting in disastrous consequences. Continuing to attract customers during recession is the survival mantra and online marketing provides the most accountable way to acquire new customers. So when times get tough, you need to make sure every marketing dollar you spend counts and provides you a return on your investment.

In summary making money during a recession still requires a lot of hard work. The Internet can help you do this, but you still will have to log on everyday and work at getting traffic to your website if you want to make sales.

While these may be tough times, they will not last forever because there is always light at the end of the tunnel, unless it is an oncoming locomotive!!!